Emerging market hedge funds boom with billions more assets

Michael Bow is a reporter at City A.M. covering private equity, funds, investments and asset managers. He can be reached on michael.bow@cityam.com

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Michael Bow

EMERGING market (EM) hedge funds boomed in the fourth quarter of last year, led by a surge in macro strategies and India-focused hedge funds, according to new figures.

EM hedge funds across the world reached 1,100 by the end of 2012, a new record, while the amount of cash committed also leapt by $11.2bn (£7.39bn) to a record high of $139bn.

This was driven by an additional $3.1bn given to hedge fund strategies in the fourth quarter of 2012 by investors, reversing a trend since the third quarter of 2011 for investors to pull cash from EM hedge funds.

In total, 2012 saw net asset flow of $933m into EM hedge funds, according to figures from Hedge Fund Research (HFR).

HFR president Kenneth Heinz said EM hedge funds would have “significant opportunities” in early 2013 as EM monetary authorities used more inflation targeting and economic stabilisation measures.

The most successful strategies were macro plays on currencies and commodities. The HFR data shows macro hedge funds increased to 14.4 per cent of total EM hedge funds at the end of 2012, versus 11 per cent at the end of 2011. India-focused funds also surged, with HFR’s India index gaining 27.6 per cent for the year compared to 9.5 per cent for its Brazil index, 9.4 per cent for China and 8.6 per cent for the Middle East and North Africa.